Big leases displace small tenants

The trend of large publicly-traded companies signing big leases in 2011 has resulted in a lot of smaller companies scrambling for new space. Companies and brokers say competition is fierce and rents are climbing in certain markets because a large number of companies are getting booted out of major properties.

They were directly impacted by the move but other companies were also indirectly impacted. I heard that GoPro had a tough time in its search for about 90,000 square feet in the area because it was suddenly competing with all these companies getting pushed out by Sony.

The issue continues down the Peninsula. Last August, Google signed a massive lease for more than 700,000 square feet at Moffett Park's Technology Corners in Sunnyvale. Tenants of that campus no doubt immediately started their hunt for new space even though Google can't move in until January 2013. It remains to be seen where they'll end up.

And, Google also bought Landmark at Shoreline in Mountain View last year, an 18-acre office park with 66 office suites. It's unlikely that Google bought the property to serve as a landlord so while the timing is in question, we all know that at some point in the near future, those dozens of tenants will too have to find new space. With Mountain View and Palo Alto tighter than ever, it will be interesting to see where those tenants end up. Will they move north – to Redwood City and beyond? Or will they go south – to Santa Clara and San Jose?

Cornish & Carey's Bob Garner, who represented Guidewire in its search for a new office, expects that San Mateo County will get some spillover.

"All of that has some sort of reaction to our market in San Mateo County," he said. "Companies that can't find space in Sunnyvale, Mountain View and Palo Alto start moving up the peninsula so we get that migration. It's great for the real estate market here."